THE CANADIAN Association of Mutual Insurance Companies is hoping the Ministry of Finance will follow Senate committee recommendations when drafting regulations on open banking.
The Senate committee on banking, trade and commerce has released a report that said any framework on open banking should prohibit the use of consumer banking data for insurance purposes.
Open banking would allow customers to share data held by their banks with third parties such as other financial institutions or financial technology companies, who could combine it with data from other sources to yield new benefits for consumers.
CAMIC spoke before the committee three times and kept close contact with senators after open banking legislation was passed last year.
President Normand Lafrenière said the lobbying effort seems to have paid off.
“The recommendations are exactly what we were talking about,” he said.
CAMIC’s main concern is that bank-owned fintech companies could share information and contravene the prohibition on banks selling insurance in their branches.
“We are saying that fintechs could do from the back door what banks can’t do from the front door — and the senators agreed with us,” Mr. Lafrenière said.
“And they agreed not only on the bank issue but also agreed it was important to protect the banking data of the consumer, which was our second issue so we were very pleased with the senate’s recommendations, it is what we wanted.”
He said CAMIC believes the Ministry of Finance, which is drafting the regulations, will agree with the Senate.
“We don’t know that as of yet but we are very hopeful,” Mr. Lafrenière said.
“We have a good relationship with the Ministry of Finance and there is a good chance that what we have asked for will be implemented.”
Insurance Brokers Association of Canada CEO Peter Braid said the Senate report was clearly conducted through the lens of consumer protection and privacy.
“We are particularly pleased to see the strong recommendation that the prohibition on the use of consumer banking data for insurance purposes must be both maintained and reinforced,” he said.
The Senate’s first recommendation is to appoint the Financial Consumer Agency of Canada as an oversight body.
“We agree with the recommendation that FCAC oversee research and public education, and respond to public complaints regarding open banking,” Mr. Braid said.
“To further strengthen the separation of banking and insurance in an open banking framework, section 416 of the Bank Act (that a bank is not to undertake the business of insurance except to the extent permitted by the Act or the regulations) should also be added to their mandate.”
He said it is somewhat concerning that the Senate calls for an industry-led approach to developing an open banking framework.
“Instead, to ensure that these important safeguards remain solidly in place, I believe that open banking should be government-led with industry input.”
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